On dank and unlit streets, haunted customarily by gangs of youths charging their own private taxes, the coming of Daniel Ortega is cause for celebration. Fireworks and fairy lamps and the first pounding beats of the new Sandinista anthem draw the loyal and bored from Managua's squat, mildewed houses. An old man and two small children jump up and down in excitement. "We want light," they shout in unison, "we want light."

Their wish could possibly come true this Sunday, 5 November 2006. In an election whose build-up has consumed the passion and the billboards of the nation, Ortega, for the first time since his shock defeat in 1990, stands an excellent chance of returning to power. Reincarnating himself as a voice of peace on a pilgrimage across Nicaragua, the 60-year-old veteran of a vicious cold-war battleground has stirred all the old enemies from their lair - Washington, big business, small farmers, Mosquito-coast Indians. His political reputation has long been mud. His personal wealth is undoubtedly massive. And yet many Nicaraguans still want him back.

"In the last five years, I've seen my salary cut in half. I've been getting less while everything costs more," Andrés Bonilla, a 34-year-old council driver, tells me as we wait for Ortega's motorcade to begin. He chokes back a shudder in his throat. "If that goes on for another five years, I don't know how I will feed my children. It's them I'm voting for. It's too late for me now."

The foes of the Frente Sandinista de Liberación Nacional [Sandinista National Liberation Front / FSLN], meanwhile, wag their fingers in warning. In the second poorest country of the Americans - only Haiti is worse off - poverty, unemployment and brute hunger dominate voters' minds. Daily blackouts last up to twelve hours as oil-powered generators fail; scuffed, wretched children roam through Managua's traffic and over central America's biggest garbage heap, La Chureca. Yet while Ortega pours out sympathy for the poor and an ever-lengthening list of promised subsidies, his rivals recommend tight plugs in the ears.

Supported with total candour by the United States embassy in Managua, dissident Liberal candidate Eduardo Montealegre insists capital would flee the Ortega "nightmare" as it did in the 1980s, when Ronald Reagan mounted his infamous blockade and inflation topped 14,000 percent. Ambassador Paul Trivelli, Nicaragua's leading business association and the country's richest man, Carlos Pellas, all concur; Montealegre, born to a major banking clan, trained in Harvard, proud owner of a helipad in his back garden, is their favourite to run a graft-free and growing country.

Ortega, however, has his own friends. An aperitif of Venezuelan oil, to be paid for at a generous discount, arrived early in October for the country's Sandinista-dominated local governments. "Their policy is very simple: subsidies from Hugo Chávez," argues Carlos Chamorro, a leading journalist and formerly the editor of the Sandinista house journal in the 1980s:

"When you speak with the (FSLN's) leaders, which is hard to do now because they're so closed, they talk about generating revenues via solid oil support and reinvesting it here, rather than paying Venezuela back."

And so the schism of two decades ago reopens in a battered isthmus land of 5 million people. Chávez and the anti-imperial cause play the part of the communist front. Washington, indignant at the possible return of an extracted thorn, groans and thunders daily. The nation's poor demand their share of respect and riches, and the rich field one of their own to defeat him. "A large part of this country is frozen in what happened in 1990, when the Sandinistas lost power" argues María López Vigil, editor of the political monthly Revista Envío. "That year was the end of a world, a world of dignity, dreams, expectations and opportunities, as well as the end of a war that marked three generations ... The ghosts of that war are still present."

Ivan Briscoe is editor of the English edition of El País, Madrid. His outstanding commentary and analysis about Latin America and Spain on openDemocracy include:

"Argentina: how politicians survive while people starve"
(April 2003)

"Beyond the zero sum: from Chávez to Lula" (July 2003)

"A victory for Spain, not al–Qaida" (March 2004)

"Dreaming of Spain: migration and Morocco" (May 2004)

"The invisible majority: Venezuela after the referéndum"
(August 2004)

"All change in Venezuela's revolution? " (January 2005)

"Taking liberties: a review of Naomi Klein" (November 2004)

"Nèstor Kirchner's Argentina: a journey from hell" (May 2005)

"The new Latin choir: democracy vs injustice in Latin America"
(October 2005)

"The summit of the Americas' free–trade farewell"
(November 2005)

"The time of the underdog: rage and race in Latin America" (December 2005)

"Venezuela: a revolution in contraflow"
(February 2006)

"Fending off the iron fist: crime and the left in Latin America"
(April 2006)

"Latin America's new left: dictators or democrats?" (28 September 2006)

All power to the pact

Echoes of that past sound in every candidate's speech, but it is a peculiar electoral arithmetic that will decide the presidential victor. Ortega's invariable core support is sure to give him at least 30% of the vote. To win in the first round, however, he needs over 35%, with a five-point lead over the nearest contender. Behind him are massed the rivals: Montealegre, who most polls place second on around 20 percent; the governing Partido Liberal Constitucionalista (PLC) hopeful José Rizo; Edmundo Jarquín, from the Movimiento de Renovación Sandinista (Sandinista Renewal Movement / MRS) (MRS); and, lastly, Edén Pastora, a killing machine who fought heroically first for the 1979 revolution and then for the Contras, and will be lucky to get a percentage point.

The opponents know one thing is certain. If anyone can stop Ortega winning in the first round, then victory in the second is more or less assured - such is the weight of popular aversion to the comandante's rule. Yet the candidates are many, the Liberal cause is fractured, and the first-round threshold is conveniently low, no doubt because it was Ortega himself who decided it.

For here lies the extraordinary imprint of the last sixteen years. Whereas the deep-frozen rivalry of a war in which 30,000 died is played and replayed, the supposed loser, the history-beaten communist, never strode off the stage of power. The day after losing in 1990 to Violeta Barrios de Chamorro, Ortega vowed to gobernar desde abajo (govern from below): it is a pledge that he has honoured in full.

Two out of six television channels side openly with the Sandinistas. A host of radio stations and businesses are said to be run by Ortega and his ten children. Yet if anything marks the FSLN's surreptitious handle on power, it is the pact of 2000, signed between Ortega and the then president Arnoldo Alemán as a ruse for the latter to evade - in vain, as it turned out - a trial for pilfering $100 million. In return for their broken promise to guarantee Alemán's immunity, the Sandinista bloc in parliament rewrote the election rules and won control of an alleged 60% of all judges, as well as a share of the top electoral body and the agencies overseeing banks and human rights. Oversight of property titles and public services is set to follow shortly.

Rumours streak through Managua of the backroom deals struck by Ortega as he sits upon a heap of Sandinista apparatchiks employed to do his bidding. "When we switched off the cameras for a pause in an interview two years ago, he told me that the rich buy justice, and nobody does anything about it", a prominent reporter recalls. "‘We just resort to the same system' he said. His argument is that the rule of law is a weapon invented by capital. At heart, it's the argument of a mafia don."

In public, Ortega denies all allegations of judicial tinkering. Yet the manner in which legal charge-sheets against rival candidates happen to materialise, the astonishing way old enemies become new friends - the ex-Contra who owned the house he seized and occupied in the 1980s is now Ortega's running-mate, the Catholic cardinal who compared him to a deadly snake is now a dining partner - do somehow suggest a vital power over people's destinies. Drawn into this web, all the Liberals kick and scream against the pact, but their efforts seem futile every time a retired "freedom fighter" gladly appears at the comandante's side.

Exasperated by Ortega's machine, the cream of the Sandinista intelligentsia has flocked to a new force. But Jarquín's party, in spite of its independence from big business and party bosses, or its sensible progressive policies - raising the minimum wage, renegotiating the terms of domestic government debt - is underfunded and urban-based. Unless a miracle occurs, the challenge to Ortega will come from one of the two Liberals, heirs to the leaders who have ruled Nicaragua for the last sixteen years.

The Liberal supporters' remember revolution and war as humiliating food queues and military conscription. "We'll return to being famished, to the days when it cost a million córdobas for a soft drink", says Juliana Carrion Avurto, aged 45, at a Montealegre rally in the town of León. Her trim candidate appears on the stage, punctuating his slogans of "more and better jobs" with snatches of deafening dance music, rousing his crowd of inebriated farm workers and small business owners with praise of investment; if Ortega now speaks like a priest, Montealegre boosts his crowd like a corporate motivator.

Sixteen years have now been given over to welcoming investment from abroad. Enrique Bolaños, the outgoing president, announced recently that the country's steady growth, healthy accounts and observance of IMF accords would soon allow it "to shoot to the heights of progress and well-being like a space rocket."

Perhaps he should get out a bit more: foreign investment has meant only one thing in Nicaragua. Assembly plants in duty-free estates, or maquilas, employ 68,000 people, mainly women, in semi-skilled and outsourced tasks. The average wage in these plants is $80 a month for a 48-hour week, with unpaid weekends thrown in - and yet the queues for the next job are long.

"The only way for a Nicaraguan woman to survive these days is to migrate, become a prostitute, or work in a duty-free zone", insists Josefa Rivera, aged 50, of the María Elena Cuadra women's movement.

Outside a few freeways lined with car dealers and casinos, food courts, four-star hotels and gleaming banks, Nicaragua scrapes by. Since 1993, through all the years of financial cleansing, it has acquired 300,000 more poor people according to the national census, and become Central America's second most unequal country; malnutrition affects 27% of the population. Montealegre's campaign staff, knowing the score, travelled to León equipped with small packets of cream-filled biscuits showing the candidate's face and name on the wrapper, enabling them to wave away pesky famished children from their Land Cruisers.

Profound structural problems afflict the economy, some of them traceable to the Sandinistas: Nicaragua depends on aid and foreign remittances to fill the hole of its huge trade deficit. Outside its duty-free sweatshops, the country exports little more than meat, coffee and sugar. Its roads are woeful, veering to non-existent on the Mosquito coast. No easy state-run solution is apparent. But nor it is plausible to say, as ambassador Trivelli did to the Financial Times in September, that "Nicaragua is really poised to make dramatic progress", just so long as Nicaraguans vote for his man.

The war rhetoric may still be violent, but neither side of those trenches seems to grasp the reality of today's Nicaragua. Exhausted by rival, decade-long mobilisations, they have since settled down to the rituals of self-serving politics, caring for the loyal, aiding friends, ignoring the country's hardship unless it helps to win an argument. Ortega's machine, Montealegre's economic blindspots, Rizo's unbreakable party ties to embezzler-in-chief Alemán - all form part of the same code of a political class that prefers to see the country in its own image, rather than for what it is.

William Walker, the infamous north American buccaneer, took charge of Nicaragua and reinstated slavery in the mid-19th century with the aid of sixty mercenaries. Foreigners to this day, spearheaded by United States marines and diplomats, have toyed with the populace as if it were a fitful doll, drawing strategic red lines straight through the country. It is perhaps a characteristic that local leaders have also learned.

"For ten years in the 1980s we were wrapped up in the negativity of mass action. And this was followed by a great spiritual trough", says Augusto César Marenco, who puts the boyishness of his face at the age of 44 down to divine benevolence. Nearby his office in suburban Managua is a huge hangar roofed like a cattle-shed, where on Sundays up to 12,000 people congregate to follow him in worship.

Also on Nicaragua in openDemocracy, three articles by the country’s former Sandinista vice-president Sergio Ramírez:

"Nicaragua’s hijacked democracy
(18 November 2005)

After Herty Lewites: a crossroads for Nicaragua"
(4 July 2006)

"Don't forget Nicaragua"
(11 October 2006)

Seeing the light

From an omnipresent state mounting a literacy crusade and dispatching its people to the frontline, the leaders of the 1990s privatised 350 companies and wished the public best of luck. Disorientated and broke, some fled - there are now 800,000 Nicaraguans living abroad - others joined fledgling street gangs, and most started going to church. In what is supposedly a Catholic country, evangelical chapels are estimated to claim the faith of 35% of the population; their growth has been astounding.

God is everywhere in Nicaragua. Taxi drivers tune in to radio prayer, corrugated metal churches with wonky signs pockmark the roadside, and each and every candidate claims a blessing from on high. But it is Ortega who dares the highest. The insults against him, he tells a Managua crowd wearing the campaign's pink baseball caps, are such as Jesus Christ suffered - and must thus be forgiven. For all he wishes is peace and reconciliation. And that the blackouts, physical and metaphysical, end on 5 November.

"Let us be filled, now more than ever, with the spirit of Christ, so that all the infamies, the calumnies and the lies explode, are pulverised, and so the Light shines!" he concludes, having just read from Psalm 91.

The campaign is a masterstroke. Devised by Ortega's wife and poet, Rosario Murillo, it couches in religious metaphor a subliminal pledge of cheap fuel and guaranteed electricity (83% of which is oil-generated), an insistence that the past will never return, and a rich sense of national community. Crucially, it also draws on the key finding of the Sandinistas' strategy document: "Faced with the question of who could best resolve their problems, again and again people look upwards and reply ‘God.'"

Some observers argue the Sandinista couple has truly been born again, sloughing off their old antagonism with the Catholic hierarchy after the trauma caused by stepdaughter Zoilamérica Narvaez's claims that Ortega abused her as a child - charges since shelved by pliable judges. Others sneer at the alleged pretence. Either way, the couple's support for the parliamentary vote on 26 October to criminalise all forms of abortion, overturning a law passed in 1893, has been unstinting, evidently forgetting that Sandinista rule saw hospitals given the power over whether to abort or not; like sheep, the other parties barring that of Edmundo Jarquín followed suit.

Bit by bit, with guile and soft words, Ortega has dropped almost every Sandinista article of faith. He has vowed to obey the IMF, and not to pull out of central America's free-trade alliance with Washington (Cafta). At first he said he would nationalise cash transfers from abroad; that policy has been quashed. Even his vitriol against the Spanish electricity distributor Unión Fenosa has subsided: "we have been told in private by Sandinistas that they won't throw us out", company sources in Madrid report.

"It's a mistake to think everything must be the same as in the 1980s", declares Roberto Sánchez, the former Popular Army's spokesperson and now head of Managua's heritage bureau. His walls are decked with photos of himself alongside Yasser Arafat, inside the United Nations, or lined up beside North Korea's Kim Il-Sung - of missions from an era spent in desperate search of arms and allies. "By the end we had funeral parlours contracted just for us. Dozens and dozens of coffins. No one wanted the war to go on", he recalls.

"The aim is now to win as many votes as possible, and for that a great intellectual is worth exactly the same as a total illiterate. Now, for the first time in history", he confides. "We are going to the polls as a party that has renounced its identity in order to win over other parts of the electorate."

Hard realism is the order of the day. Though the pact is despised, Ortega's caudillo style is not the problem at the poll; however much he distorts the law, his leadership style remains natural to a people who, in the words of López Vigil, "see caudillos as their fathers, their employers, their managers. They help and they are godfathers."

Instead, his fourth electoral bid for the presidency will hinge on the power of those accumulated fears, on primitive emotions, on the longing not to be poor versus residual visions of shops without toothpaste or toilet paper. US congressman Dana Rohrabacher last weekend stirred just such fears, calling on Washington to block all cash remittances to Nicaragua if the "pro-terrorist" Sandinistas win. Ortega's paeans to faith, meanwhile, are a perfect metaphor for the popular reaffirmation he is seeking at the polls.

For mud-track settlements of cut-price people, his Sandinista message, though trimmed and corrupted, still draws on deep roots. As pick-up cars carrying rival party supporters smoke across the street grid of colonial León, with hoots and finger salutes leaving everyone in hysterics, a strange unity seems to settle on the election battle, a kind of communality in conflict. As the US tirades against Ortega roll on, so the respect in which the man is held grows. The legacy of war is not always an abiding division and hate, but also a sense that great national causes once ruled people's minds.

Or as one confused former Sandinista official tells me: "Daniel is unbearable, but I just can't get him out of my mind."